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FERC Approves Another Expansion of Northern Natural System

FERC last Wednesday issued a certificate for Northern Natural Gas Co.'s proposed expansion of its pipeline system in Minnesota -- the latest in an ongoing multi-phase project.

The proposed 2009-2010 Zone EF expansion, which is a discrete, stand-alone component of the larger Northern Lights project, would increase peak-day capacity by approximately 136,042 Dth/d.

The project calls for the construction of a 6.37-mile extension of the 30-inch diameter Faribault-Farmington D-Line; a 6.06-mile extension of the 30-inch diameter Farmington-North Branch C-Line; a 6.06-mile extension of the 20-inch diameter Elk River loop; 22.85 miles of 16-inch diameter pipeline to replace 9.32 miles of the small-diameter Rockford branch line; a new 10.85-mile, 16-inch diameter pipeline (Corcoran branch line); and a new compressor station with a 15,000-hp unit located near Albert Lea, MN. The project is targeted for operation by the winter of 2010, the company said.

Omaha, NE-based Northern Natural, a pipeline subsidiary of MidAmerican Energy Holdings, said it has executed agreements for 135,042 Dth/d of incremental firm service. It noted that service under the agreements will increase to 136,042 Dth/d by 2011.

The estimated cost of the expansion is $120.5 million. The Federal Energy Regulatory Commission (FERC) denied Northern Natural's request for rolled-in rate treatment of the project costs. "Generally, to receive authorization for rolled-in rate treatment, a pipeline must demonstrate that the revenues to be generated by an expansion project will exceed the costs of the project. This is not the case for the Zone EF expansion," the order said [CP09-11]. FERC, however, said Northern Natural could refile for rolled-in rate treatment at a later date, if it could fully support its request.

The Northern Lights project is a multi-phase pipeline expansion designed to increase the capacity of Northern Natural's pipeline in its market areas through 2026. The first phases of the project have been constructed and placed into service (see NGI, May 7, 2007; Feb. 26, 2007).

The first phases of construction were completed in October 2007, with the facilities placed into service the following month. That part of the project increased total gas volumes by 374,225 Dth/d for peak-day delivery, according to Northern Natural. The Palmyra North Expansion phase, which also is in service, provides incremental winter peak-day firm service of 44,200 Dth/d to ethanol and agricultural customers on the west leg of Northern Natural's market area.

Northern Natural is a 15,900-mile pipeline that provides 4.5 Bcf/d of gas to markets in Minnesota, Iowa, Nebraska, South Dakota, Wisconsin, Illinois and Michigan.

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